RETIREMENT OF A PARTNER

IV
RAM, ULIE, and ROCCO have been partners sharing net incomes and losses in a 3:5:2 ratio. On October 31, the date ROCCO
retires from the partnership, the equities of the partners are RAM, P104,000; ULIE P160,000; and ROCCO, P40,000. The estimated
profit to October 31 is P80,000 and the partners have appropriately decided to adjust the understated assets to fair value by
P20,000. Present general journal entries to record ROCCO’s retirement under each of the following unrelated assumptions.
a. Rocco is paid P56,000 in partnership cash for his equity.
b. Rocco is paid P60,000 in partnership cash for his equity.
c. Rocco is paid P68,000 in partnership cash for his equity.

MULTIPLE CHOICE
The following balances as of the end of 2012 for the partnership of JADE, EMERALD, and RUBY, together with their respective
profit and loss percentages, were as follows:
Assets P360,000 Jade, loan P 18,000
Jade, capital (20%) 84,000
Emerald, capital (20%) 78,000
___ ____ Ruby, capital (60%) 180,000
P360,000 P360,000
Jade decided to retire from the partnership. Parties agreed to adjust the assets to their fair market value of P432,000 as of
December 31, 2012. Jade will be paid P122,400 for Jade's partnership interest inclusive of Jade loan which is to repaid in full.
After Jade's retirement.
1. What will be the balance of Emerald's capital account?
a. P78,000 c. P92,400
b. P72,900 d. P90,900

On June 30, 2012, the balance sheet for the partnership of WOWIE, PIOLO, and DIETHER and their profit and loss ratios were as
follows:
Assets, at cost P 600,000
Wowie, loan P 30,000
Wowie, capital (20%) 140,000
Piolo, capital (20%) 130,000
Diether, capital (60%) 300,000
Total equities P 600,000

Wowie decided to retire from the partnership and by mutual agreement, the assets were adjusted to their current fair value of
P720,000. The partnership paid P204,000 cash for Wowie’s equity in the partnership, exclusive of the loan which was repaid in
full.
2. The capital balances of Piolo and Diether, respectively, after Wowie’s retirement from the partnership was:
a. P144,000; P342,000 c. P120,000; P270,000
b. P154,000; P372,000 d. P164,000; P402,000

GEMMO, REY, and ROMMEL are partners dividing profits and losses in the ratio of 2:3:3, respectively. Their capital balances on
December 31, 2010 were:
Gemmo P 90,000
Rey 70,000
Rommel 110,000

Rommel is retiring from the partnership as of April 30, 2011. After the retirement of Rommel, Gemmo and Rey will divide profit
or loss in the remaining original ratio. The partnership reported net income of P789,000 for the year 2011. Rommel is to be paid
an amount equal to 80% of his adjusted equity as of the date of his retirement.
1. Assuming that the net income is considered as having been realized evenly throughout the year, how much is the capital
balance of Rey as of December 31, 2011?
a. P509,260 c. P382,840
b. P456,660 d. P484,225

The partnership of WISCONSIN provides for 3:3:4 sharing in profits and losses to WIS, CON, and SIN, respectively. Sin is retiring
from the partnership and by mutual agreement the assets are to be adjusted to their fair values which is P37,500 higher than
their carrying amounts. Wis and Con agree that the partnership will pay P108,750 to Sin for his partnership interest, exclusive of
his loan which is to be paid in full separately. Before the retirement of Sin, total assets, Sin, loan, Wis, capital, Con, capital, and
Sin, capital has the following balances, respectively: P250,000, P25,000, P62,500, P75,000, and P87,500.
2. Which of the following is not correct?
a. The total amount paid to Sin including his loan is P133,750.
b. The balance of Wis, capital after Sin’s retirement is P70,625.
c. The total assets after Sin’s retirement is P160,000.
d. The share of Con in the excess payment to Sin is P3,125.

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